Updated 02 Jul, 2021

ETFs Losing Interest in Bitcoin, US Banks Remain Committed

ETFs Losing Interest

Key Takeaways:

  • ETFs have been expressing decreased demand to own Bitcoin
  • US investment banks are eager to offer Bitcoin and Bitcoin derivatives

A Glassnode Report States ETF Demand for Bitcoin is Slowing Down

According to a new report by blockchain analytics company Glassnode, institutional investors seeking exposure to Bitcoin have decreased their Bitcoin stakes. This demand was one of the key factors distinguishing the current rally from the 2017-2018 crypto bull run. It also was partly responsible for the stratospheric rise of Bitcoin’s price. In fact, this rise led to the all-time high in April when the digital currency reached $64,800 per token.

The slowdown in demand is shown in Glassnode’s report released earlier in the week. The analytics firm said that exchange-traded funds (ETFs) have been losing interest in recent months to hold the world’s largest cryptocurrency.

“A primary driver for Bitcoin price appreciation in 2020 and 2021 was both the narrative, and the reality of institutional demand,” the report read. “Institutional demand appears to remain somewhat lackluster,” the research mentioned.

Bitcoin’s Wild Ride Has Prompted Investment Banks to Offer Crypto Services

It must be noted, however, that it’s primarily exchange-traded funds (ETFs) that have been included in the research, such as Canadian firms Purpose and 3iQ. The findings make no mention of US investment banks which have expressed strong desire to offer crypto and still remain committed to finding ways to provide the service.

During the first half of the year, top US investment banks have been increasingly pressured by their clients to allow access to Bitcoin and Bitcoin-related products. Citi was among the first of the large banks to lay out its view on the emerging market. Near the end of the first half, Citi released a 108-page report. This report said that bitcoin “may be optimally positioned to become the preferred currency for global trade”.

Soon after, Bank of America and Morgan Stanley also chimed in. “Total bitcoin returns this year are already among the highest in its short history and investors have noticed,” said Bank of America’s global commodity research team. The report by BofA also mentions concerns over the environmental impact of crypto mining, an issue that is currently under serious consideration by crypto circles.

Goldman Sachs restarted its digital currency trading desk in March. On the other hand, JPMorgan’s Jamie Dimon has stated the bank’s clients are eager to get their hands on the evolving asset class.

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